10-01-2009, 05:22 PM
Dear
They should draft and finalize a "Business Transfer Agreement" that should be registered and signed by both parties i.e. "partners of AOP" on one hand and the private limited company on the other hand.
This business transfer agreement should include all details regarding transfer and valuation of assets and liabilities and will mention the disposal of NET WORTH i.e. excess of assets over liabilities being transferred.
Such disposal can be either in form of ordinary shares to be issued to the partners of the AOP (promotors of the company as well) or in the form of a combination of ordinary shares and loan notes. If the later disposal is decided, the repayment schedule of loan notes should also be agreed and made part of the "Business Transfer Agreement".
The safest and legal way is to revalue the assets (even re-assess the liabilities) before transfer to the Company so that the requirements of Capital Issue Rules, 1996 may also be fullfilled and it is ensured that shares are not being issued on an excessive value. For such revaluation independent valuer will be used whose report will also be required to be certified by a firm of CAs (Capital Issue Rules, 1996).
This will also benefit the shareholders (AOP partners) as they will probably get the shares of higher amounts unless the assets are found to be impaired.
I hope this will provide a roadmap. (For such advice I charge at least a quarter of 100K; just kidding).
Regards,
KAMRAN.
They should draft and finalize a "Business Transfer Agreement" that should be registered and signed by both parties i.e. "partners of AOP" on one hand and the private limited company on the other hand.
This business transfer agreement should include all details regarding transfer and valuation of assets and liabilities and will mention the disposal of NET WORTH i.e. excess of assets over liabilities being transferred.
Such disposal can be either in form of ordinary shares to be issued to the partners of the AOP (promotors of the company as well) or in the form of a combination of ordinary shares and loan notes. If the later disposal is decided, the repayment schedule of loan notes should also be agreed and made part of the "Business Transfer Agreement".
The safest and legal way is to revalue the assets (even re-assess the liabilities) before transfer to the Company so that the requirements of Capital Issue Rules, 1996 may also be fullfilled and it is ensured that shares are not being issued on an excessive value. For such revaluation independent valuer will be used whose report will also be required to be certified by a firm of CAs (Capital Issue Rules, 1996).
This will also benefit the shareholders (AOP partners) as they will probably get the shares of higher amounts unless the assets are found to be impaired.
I hope this will provide a roadmap. (For such advice I charge at least a quarter of 100K; just kidding).
Regards,
KAMRAN.
